Court rules Jimmy John's not responsible for alleged labor law violations by franchisees

Armando L. Sanchez / Chicago Tribune

An employee walks out of a Jimmy John's located at 3328 North Clark St., Wednesday, Sept. 24, 2014, in Chicago. Jimmy John’s is not responsible for making franchisee employees work overtime without pay, according to a federal court ruling published this week.

An employee walks out of a Jimmy John's located at 3328 North Clark St., Wednesday, Sept. 24, 2014, in Chicago. Jimmy John’s is not responsible for making franchisee employees work overtime without pay, according to a federal court ruling published this week. (Armando L. Sanchez / Chicago Tribune)

Jimmy John’s may control how to make a sandwich, but the restaurant chain is not responsible for making employees of franchisees work overtime without pay, according to a federal court ruling published this week.

The decision by a Chicago federal judge found that Jimmy John’s is not liable as a “joint employer” in a class-action lawsuit brought by former assistant store managers against their franchisee employers for alleged labor law violations.

The lawsuit alleged the employees were improperly classified as salaried managers and unfairly exempted from overtime pay requirements under the Fair Labor Standards Act.

Founded in 1983 by Jimmy John Liautaud, the Champaign-based chain has 700 individual franchise owners and nearly 2,200 franchise stores nationwide, according to the lawsuit.

While Jimmy John’s imposes strict guidelines on how franchisees run their restaurants — from the “appropriate way to spread mayonnaise” on a sandwich to how to organize items in the refrigerator — it does not have the power to hire or fire employees or determine whether they should be paid a salary or hourly wage, U.S. District Judge Charles Kocoras ruled.

“Certainly, training employees to perform tasks the ‘Jimmy John’s way’ constitutes some control over the way the store is managed,” Kocoras wrote in his ruling. “But that alone does not rise to the level of joint employment.”

Attorney Gerald Maatman, who represented Jimmy John’s in the case, said in an emailed statement Thursday he was “pleased with the court’s thorough and well-reasoned decision.”

An attorney representing the former employees did not respond Thursday to a request for comment.

The Jimmy John’s court decision is in line with a December ruling by the National Labor Relations Board that insulates parent companies from alleged labor law violations by their franchisees.

Reversing a broader Obama-era joint employment standard, the NLRB said parent companies have to exercise direct control over “essential employment terms” to be held responsible for labor law violations by their franchisees.

The NLRB policy shift benefits restaurant chains such as Jimmy John’s and Chicago-based McDonald’s, the largest U.S. franchise operator in total sales, and was supported by the National Restaurant Association.